"The deal that we did last year with the Kings and the NBA is still available," City Manager John Shirey told KCRA 3.

On March 6, the city council approved a "term sheet" for how to fund a $390 million arena in the downtown rail yards.

The proposal would have required the city to pay about 65 percent of the cost, with most of the remaining funds coming from the owners of the Kings and arena management company AEG.

The owners of the Kings, the Maloof family, later backed out -- saying that they had not agreed to parts of the deal and that some of the city's revenue estimates for the arena were inflated.

Last week, Mayor Kevin Johnson announced he would try to assemble a team of buyers for the Kings to counter an expected offer from a group that plans to move the Kings to Seattle.

Johnson has said any new owners would insist on a new arena.

"We have a plan in place. It would need to be tweaked with a new owner. But we think we can do it," council member Steve Cohn said.

Under the plan, Sacramento would pay most of its $255 million contribution through one of two ways.

The first option would be to lease the city's parking spaces to a private operator in exchange for a one-time lump payment.

The second option would be to borrow the funds by issuing long-term bonds, and then repay those bonds by using parking revenues.

"I'd like us to keep control over the parking. I think we can do better, make more money. And this has actually given us some time where our parking folks have spent a lot of time looking at that, to see how we can do better as a revenue source," council member Jay Schenirer told KCRA 3.

Either option would create a $9 million hole in the city's annual budget while an arena is built.

Schenirer said that the proposal likely would have to be voted on again by the city council.

"We have two new council members who, I'm sure would want to weigh in on this, so this has to be a transparent process," Schenirer said.

Appearing at a groundbreaking ceremony on Wednesday, Johnson led the crowd in a "Go Kings!" cheer.

Johnson left before the end of the ceremony and avoided reporters' questions about his search for new owners.

Last October, the Seattle City Council and the King County Council approved a proposal to fund an arena, if an NBA team and an NHL team can be found as tenants.

The Seattle proposal is for a $490 million facility -- about $100 million more than what Sacramento proposed.

The Seattle arena would require about 40 percent public financing, compared to 65 percent in Sacramento.

Seattle also would issue bonds to pay for the public financing, but would repay those bonds -- not with parking funds -- but rather, entirely with rents and admission fees generated by the arena.